Real positions. Real outcomes. No cherry-picking.

Avoided almost entirely.

Why

The structural problems run deep: Indian farmland is highly fragmented, with very small average holding sizes that prevent any real economies of scale. That fragmentation shows up directly in the numbers, agriculture employs close to 50% of India's workforce but contributes less than 15% to GDP, which is really just another way of saying productivity per worker is low and structurally difficult to fix quickly.

On top of that, the sector is exposed to unpredictable factors I have no edge in forecasting, monsoons, weather shocks, and input cost inflation, combined with a persistent logistics gap that shows up as high post-harvest losses (crops that are grown successfully but never make it to market in sellable condition).

Verdict

Low margins plus high unpredictability plus no scale is about as poor a combination as I can find for a concentrated, high-conviction bet. Stays on the avoid list.

More nuanced than a flat avoid, this is a sector where I stay away from direct plays but remain open to indirect ones.

Why (Direct Plays)

Direct auto ancillary names face a stack of overlapping risks: policy uncertainty generally, an unclear path for PLI (production-linked incentive) support specifically, and the structural risk that internal combustion engine (ICE) component makers face obsolescence as EV adoption accelerates. Add in intensifying competition from Chinese suppliers, and the direct-play risk/reward does not clear my bar.

Where I Stay Interested

Indirect plays that benefit from the same underlying auto/infrastructure demand without carrying the ICE-obsolescence risk directly, building materials and infrastructure raw materials being the main example.

Verdict

Avoid direct auto ancillary exposure. Indirect, infrastructure-adjacent plays remain on the table.

Structurally difficult economics for direct airline plays.

Why

Airlines run high fixed and variable costs, and in India specifically that is compounded by heavy dependence on imported jet fuel (India imports roughly 89% of its oil), meaning rupee depreciation hits airline cost structures directly and repeatedly. Layer on intense competition, not just airline-to-airline, but airlines competing against rail for the same travelers, and it is a sector where even well-run companies can struggle to convert demand growth into durable margins.

Where I Stay Interested

I prefer indirect exposure here rather than avoiding the theme entirely: airport operators (e.g., GMR) capture aviation-sector growth without carrying an airline's direct cost exposure. MRO (maintenance, repair, overhaul) businesses look structurally attractive, high margin, genuine moat potential, but as of this note, I am not aware of any pure-play listed MRO options in India, so this remains a watch-item rather than a position.

Verdict

Avoid direct airline exposure. Airport operators are an active area of interest; MRO is a watch-item pending a listed option.

Avoided.

Why

The core problem is competitive, not cyclical: Indian chemical manufacturers are structurally exposed to Chinese dumping, China floods global markets with chemicals at prices that are difficult to compete with, gaining market share quickly wherever it targets. Chemicals are China's third-largest export category to India after electronics and machinery, and India also imports meaningful volumes of chemical feedstock from China, which adds a second layer of vulnerability (input-cost dependency, not just finished-product competition).

The sector-wide result: minimal R&D spending and limited innovation, low ROCE, and little evidence of Indian players actually gaining durable market share.

Verdict

Nothing in the current setup suggests this changes without a major structural shift (e.g., aggressive anti-dumping policy or a large capital cycle). Stays on the avoid list until that changes.

The most nuanced sector on my avoid-adjacent list, not a flat avoid, but currently not actionable within my filter.

Why

India cannot compete with China on manufacturing cost, but is genuinely better positioned on quality and complex APIs (active pharmaceutical ingredients), and that gap is improving further with PLI support. R&D spending is still low relative to global peers, but the trend line is positive.

Name to Watch

Divi's Laboratories stands out, importantly, it is a manufacturing and process-optimization business, not a drug-discovery company, which is a more analyzable, less binary kind of pharma bet. Two things keep it off the table for now: valuation looked stretched as of late October 2025, and it is a large-cap, which runs directly into my broader thesis filter that large caps do not offer the asymmetric upside I am looking for regardless of business quality.

Verdict

Not currently actionable. Worth revisiting if either the valuation resets or a smaller, similarly-positioned name emerges.